As Iraqi mortars blasted Tel Aviv during the Persian Gulf War, and the air turned black from burning buildings, American and European businesses raised a collective eyebrow when their imports from Israel arrived — on time.

The Gulf War actually did more to blast Israel out of the economic Dark Ages than cripple industry or inflict casualties, according to Yishai Laks, the new Santa Clara-based economic consul from Israel.

In proving that its industry and financial infrastructure could withstand even war, Israel attracted unprecedented attention from international businesses — many in Silicon Valley — looking for reliable overseas markets. And that's why Laks' arrival here is critical.

The 32-year-old economic consul has pledged to expand the Bay Area's role in Israel's post-Gulf War economic boom. He arrived in Silicon Valley last month to replace Shlomo Shalev, the former economic consul, who left for a position with an Israeli firm.

Highlighting recent developments in Israel's economic boom, Laks noted:

*More than 80 Israeli companies are traded daily on the New York Stock Exchange, and 18 recently went public in the United States.

*Overseas investment in Israeli industry exceeded $1 billion in 1996.

*Israel's gross domestic product experienced more growth last year than the GDP of any other country in the world.

*Santa Clara-based Intel last year decided to build a $1.6 billion plant in the Holy Land, and Applied Materials, also of Santa Clara, recently bought two Israeli companies for $285 million.

With such ammunition, Laks will encourage further American investment, joint ventures and trade relationships with Israel.

He plans to approach businesses throughout the Western United States and Alaska to spread the word: "Don't donate money to Israel — do business with us."

American Jewish executives who are politically minded, people such as Stanley Gold of Shemruk and Ted Arison of Carnival Tours, have taken that cue. Their steady investment demonstrates that while Jerusalem's hardline politics have scared off some potential donors, American Jewish dollars are still streaming into the country.

However, Laks scorns those who bring a political agenda to Israel along with their business.

"We don't like American companies to come to Israel to participate in politics," even though "they are helping the country" with their investments.

The consul reports that the economic boom has had a profound effect on the average Israeli, who enjoys a higher standard of living, lower inflation and more consumer choices than five years ago.

Not all Israelis, however, are experiencing prosperity. Unemployment continues to climb in non-industrialized towns in northern and southern Israel. For this reason, public and private efforts are under way to train the unskilled for the growing abundance of high-tech jobs.

Forces within Israel also have played a role in the economic boom, according to Laks.

The Israel Defense Force has matriculated young Israelis with sophisticated telecommunications training, which eases the financial burden of publicly funded universities. Some of the skilled military graduates head directly into private industry once they are finished with military service

Russian immigration has had its own impact on the techno-craze.

"Seven hundred fifty thousand emigres from the former Soviet Union arrived with the highest level of education — Ph.D.s, engineers and other professions," Laks said.

"In the last two to three years, they have contributed to the economy, and the contribution has been huge."

The immigrants came with expertise in mining, railway and nuclear engineering and other skills not widely needed in Israel. Many had to convert their technical skills to the telecommunications field in order to find work.

As a result of the Russian influx, the country boasts the highest ratio of engineers and researchers in the workforce of any industrialized nation in the world, with 135 per 10,000 employees. Japan ranks second with 85 per 10,000 employees.

Local investors are impressed by that profile. But the bottom line is that Israel can offer security technology, such as software coding and encryption, that can't be found elsewhere. And that, Laks said, is the selling point that will motivate Silicon Valley to invest in Israel for years to come.